1. Ch 6.1 Vocab

2. Annuity
A contract between an individual and an insurance company where the individual makes a series of payments that are invested by the company and repaid to the individual at a later date, generally during retirement.

3. Financial Risk
The chance that an individual, business, or government will not be able to return money invested.

4. 401(k)
A retirement plan that allows employees in private companies to make contributions of pre-tax dollars to a company pool that is then invested in stocks, bonds, or money markets.

5. Fraud Risk
The chance that an investment has been misrepresented.

6. Individual Retirement Account (IRA)
An account in which an individual may set aside earned income in a tax-deferred savings plan for his or her retirement.

7. Inflation Risk
The chance that the rate of inflation will exceed the rate of return on an investment.

8. Market Risk
The chance that the value of an investment will go down because of a change in supply and demand.

9. Social Security
A federal system of old-age, survivors’, disability, and hospital care (Medicare) insurance which requires employer’s to withhold (or transfer) wages from employees’ paychecks and deposit that money in designated accounts.

10. Ch 6.2 Vocab

11. Life Expectancy
A statistical measure of the average length of life from birth to death.

12. Lifestyle
The way people choose to live their lives, based on values they have chosen.